Global Market Highlights
The DJIA weakened by 0.31% on Friday (22/09), followed by the S&P500 (-0.23%) and the Nasdaq (-0.09%). Wall Street experienced contraction, in line with the hawkish stance of The Fed signaling interest rates will be higher for longer. Meanwhile, the global composite PMI flash for Sep-2023 slightly dropped to 50.1 (vs 50.2 previously). Today, the market will be looking toward several data releases such as: 1) US Chicago Fed National Activity Index Aug-2023; 2) US Dallas Fed Manufacturing Index Sep-2023; 3) Germany Ifo Business Climate Sep-2023.
Domestic Update
• The Asian Development Bank (ADB) has revised upwards its economic growth projection for Indonesia to +5% YoY in FY23E (vs +4.8% YoY previously). MNCS Comment: We forecast Indonesian economic growth in FY23E to range between 4.9%-5.1% YoY. We believe this projection is bolstered by manageable inflation, supporting consumption levels, macroprudential and pro-stability policies, and a trade balance that remains in surplus.
Company News
1. ESSA IJ has secured an operational contract for an LPG refinery until 2027, reaching 456.81 BSCF (Emiten News). MNCS Comment: We expect this to bolster the company's performance through LPG processing segment sales. The sustainability of the LPG processing segment is anticipated to act as a buffer with the declining sales performance of ammonia, triggered by commodity price moderation. Currently, ESSA is traded at the level of 2.12x PBV.
2. KAEF IJ is targeting an online sales growth of 10%-15% YoY in FY23E (IQ Plus). MNCS Comment: We observe that strengthening the digital segment and expanding offline stores can boost the company's revenue in the future. We believe this can enhance the omnichannel experience, expected to increase customer traffic and positively impact the KAEF ecosystem. Currently, KAEF is traded at the level of 0.58x PBV.
3. PTBA IJ recorded a production volume growth of +18% YoY, reaching 18.8 million tons in 1H23 (Market Bisnis). MNCS Comment: With a coal production volume target of 41.0 million tons in FY23E, the realization until 1H23 has reached 45.9%. We anticipate the increase in production volume to serve as a buffer against the declining coal commodity prices. Furthermore, a favorable climate is expected to cushion the company's production volume. Currently, PTBA is traded at the level of 5.94x/1.80x PER/PBV.
IHSG Updates
The JCI increased by 0.36% to 7,016.44 on Friday (22/09), accompanied by a net foreign buy of IDR314.19 billion. Several sectors strengthened, pushing the index upward, led by the infrastructure sector (+1.49%) followed by the non-cyclical sector (+1.03%). On the other hand, sectors experiencing a decline were led by the cyclical sector (-0.14%), followed by the health sector (-0.13%). The index's rise was in line with the majority of Asian exchanges, where investors positively responded to Japan's inflation rate in August 2023 and the BoJ's decision to maintain its benchmark interest rate. The Rupiah closed flat at IDR15,375/USD. We estimate the IHSG will move within the price range of 7,002-7,046 pending the release of M2 Money Supply YoY Aug-2023 data. Today's Recommendations: AKRA, MDKA, PGEO, TLKM.
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